If the U.S. dollar collapses, several other currencies would likely follow due to the interconnectedness of global financial systems and the U.S. dollar's dominant role in trade, reserves, and finance. Here are the most vulnerable:
1. Currencies Pegged to the Dollar:
Saudi Riyal (SAR), UAE Dirham (AED), Qatari Riyal (QAR), and other Gulf Cooperation Council (GCC) currencies have fixed exchange rates to the U.S. dollar. They would likely collapse or need to be re-pegged or floated in response.
2. Countries with High Dollar-Denominated Debt:
Emerging Market Currencies: Countries like Argentina, Turkey, and Brazil have large dollar-denominated debts. A U.S. dollar collapse would destabilize their ability to service this debt, leading to currency devaluation or collapse.
3. Highly Leveraged Currencies:
Euro (EUR): Many European banks hold large amounts of dollar-denominated assets, and the eurozone itself has substantial U.S. dollar exposure. While the euro is a major global currency, its economies' heavy reliance on the U.S. financial system could trigger instability.
Japanese Yen (JPY): Japan holds significant U.S. debt, and Japanese banks are highly leveraged in U.S. dollar assets. The yen would face volatility, although Japan's large domestic economy might cushion the blow somewhat.
4. Currencies of Major U.S. Trade Partners:
Canadian Dollar (CAD) and Mexican Peso (MXN) would be severely impacted due to their strong trade ties with the U.S. Any U.S. economic crisis would heavily affect their economies, leading to currency instability.
5. Countries with Large Foreign Exchange Reserves in USD:
Nations like China and India hold large portions of their reserves in U.S. dollars. While their currencies (yuan and rupee) might not collapse immediately, a significant hit to their reserves could lead to devaluation or severe inflationary pressures.
In general, the currencies of economies heavily tied to the U.S. in trade, investment, and financial markets, or with significant dollar-denominated debt, would be at greatest risk.